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Technology at the Rescue of Canadian Retailers
In the last few years, the arrival of American and foreign giants has profoundly changed the commercial landscape for our Canadian retailers, who must now deal with an increased pressure on the cost and availability of leases, salaries and quality of available manpower. As a result, retailers, unable to evolve in their traditional business model, will see a considerable decline in their assets; some may even be expected to disappear.
Faced with the substantial means of these American giants, is the fight in vain for Canadian retailers? Clearly not! The key: optimizing the use of technology. While the traditional model limits interactions with the client, and advertising / promotions are initially focused on specific segments (women aged 35 to 45, etc.), the use of technologies changes the rules of the game as it offers a flexible shopping environment available at all times. Optimizing the use of technologies makes it possible to target customers in a more precise and personalized way. The result? A better return on investment!
Retailers now have several tools to proceed with the analysis of customer data. Over and above basic customer loyalty programs, privilege cards and the creation of user profiles directly on websites, companies now offer customer behaviour analysis. How do consumers shop? Why do they buy? What did they buy in the last 15 days? Using this data, retailers are able to forecast customers’ needs, offer instant discounts and specifically target promotions and products to be suggested.
Social media also allow retailers to woo their customers’ “friends” by suggesting, for example, a “special discount” on the last item purchased by a “friend” which can be sent via Facebook. According to a recent study, 59% of purchases in Quebec are influenced by friends, well above the influence of traditional advertising (30%), of television (25%) and magazines (24%).1 Utilizing technologies will, without a doubt, become another tool in retailers’ arsenals!
In recent years, numerous businesses have been established to support retailers. Many start-up companies offer new search engine optimization solutions in order to increase online sales, without having to make significant investments in computer systems.
While many retailers readily adopt this new business model, some more traditional retailers are still not comfortable transitioning their sales towards virtual markets; some even view this new model as a direct competition to the “bricks and mortar” approach. Some are also predicting the demise of the store as we know it today! In reality, while mobile and virtual sales offer certain advantages to customers such as convenience, speed and ease of access, direct contact with the customer always takes place in stores. The opportunity created by online sales makes it possible to reduce store size (and hence mitigate soaring rental costs) and reinvest these savings in developing a shopping experience which will boost brand value for customers coming to the store. One of the most recent studies conducted in the last year indicates that while 86% of Quebec consumers’ research products online, only 2% of sales are made over the Internet.2 It is therefore clear that website optimization inevitably generates store sales.
This revolution also applies to traditional markets such as the hardware store. For example, certain New York hardware stores providing construction materials have been converted into basic showrooms offering free, same-day home delivery subject to ordering before 1:00 p.m. Rent savings are then reinvested in technology and employees training, so that the company may offer outstanding customer service.
There is no doubt that Canadian retailers who will be able to stand up to American competitors will be those who capitalize on their technology investments over the next few years, as well as those who elaborated a strategy incorporating the development of online sales combined with an improved in store customer experience. The consumer does not make a difference between the mobile commerce, website or store. These three channels are now part of the overall customer experience. Many Canadian retailers have already fallen behind over the past few years; it will be even more crucial for them to react promptly, before accumulating an insurmountable delay!
E-commerce at a glance:3
1 - Google Québec – Cercle Omer DeSerres, Richard Darveau, September 18, 2013.
2 - Yahoo! and comScore Study Finds Online Consumers Who Pre-Shop on the Web Spend More In-Store, July 2007.
3 - Trendex Research Canadian Apparel 2013, Yearbook.
4 - La présence des détaillants internationaux au Canada et au Québec, Développement économique, Innovation et Exportation, April 2011.